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A $40-million fund launched last week by Australia-based global impact firm Palladium aims to invest in agribusiness value chains and off-grid clean energy ventures in Ghana, Kenya and Nigeria.
The fund — the Palladium Impact Fund I — will provide debt and quasi-equity investments and aims to make its first close later this year.
Palladium said in a statement last Thursday (22 August), that it will manage the fund which is anchored by $5-million investment of its own capital.
The $40-million Palladium Impact Fund I will focus on Nigeria, Ghana and Kenya
Investors of the fund will include foundations, family offices, pension funds and institutional investors.
The fund will invest between $250 000 and $2-million in small and medium-sized enterprises in emerging markets for expansion, growth at scale and working capital associated with growth.
The investments will be through a mix of debt and quasi-equity instruments with an average term of about six years.
In addition, the fund will also apply a “gender lens” which prioritises benefits to women through “economic empowerment and opportunities”.
Palladium Impact Investments head Andrew Tillery said in the same statement that the firm had chosen to invest in “empowering African women” for its first impact investment fund.
“Women perform the majority of agricultural activities, own a third of all firms, and are key to the welfare of their families,” added Tillery.
The firm also said the fund will aim to alleviate poverty and impact 500 000 households, as well as create at least 3500 full-time jobs, 60% of which will be for women.
Palladium said its work with aid agencies like USAID, UK’s Department for International Development (DFID) and Australia’s Department of Foreign Affairs and Trade (DFAT) has contributed to “a significant pipeline” of investment opportunities, local networks and a strong sense of “what real impact takes”.
Palladium’s investments on the continent include a shea nut harvesting and processing business in Ghana as well as off-grid solar energy power company PEG Africa.
The firm claims it has a further 10 investments under due diligence, having sourced over 400 deals.
Palladium said the fund will focus on three primary target markets, namely Nigeria, Ghana and Kenya.
The company’s CEO, Christopher Hirst said the firm is “ideally placed” to use its extensive international development work and global reach to source deals for potential, credible investment opportunities.
“Ultimately we want to transform how development is financed, bridging the gap between aid and investing,” added Hirst.
Internal Rate of Return of five percent
Tillery said Palladium’s 54-years of experience have taught the firm that for an investment to have an impact, it has to be sustainable. This, he said, means it needs to generate a financial return.
A brochure on the fund (opens as PDF) states that the fund which is set to run for 10 years — and is extendable for two successive years — will deliver a net Internal Rate of Return (IRR) for investors of five percent.
Palladium Impact Investments team has worked together for over three years. It includes Brad Merchant, Roberta Bove and Isaac Boateng.
Featured image: Palladium: Make It Possible via Facebook